The Mystery Flavor of the Day

The Republican electorate (or, at least, the media speaking for the Republican electorate) has been plowing through new candidates at a blistering pace. We’re forced — time and again — through the “Will he or won’t he?” ritual, only to see a candidates meteoric rise followed by a painful crash. Well, let me introduce you to the mystery flavor of the day (though I suspect you’ll know who he…or she…is long before I’ve finished with the back-story):

This potential candidate was born to a cleaning lady and a barber/janitor/chauffeur in the urban South. Mysterio’s father worked three jobs to afford a home and a college education for his children, and the candidate attributes success not to “material” but “spiritual” wealth. He attended Morehouse College, where he earned a B.A. in mathematics, and Purdue, where he earned his Masters in computer science. He went on to work in ballistics for the navy, eventually moving to a private firm, where he rose up the corporate ladder and established himself as an effective businessman. In his years in corporate America, he turned around a number of failing firms and eventually got a post on the board of directors of a regional Federal Reserve Board, serving as its chairman. He has received honorary degrees from eight universities, and he won the “Horatio Alger Award,” an honor shared he shares with Dwight Eisenhower, Michael Bloomberg, Colin Powell, Bernard Baruch, and many others (really ranging in worthiness). Now, you should also know (though I hesitated to give this away too early), that this man is an African-American, born in 1945, and raised in Memphis and Atlanta. Yes, I’m talking about Herman Cain. How did you ever manage to figure that out?

But, of course, his degree in mathematics has not really seemed to contribute to his understanding of how his 9-9-9 plan would work in principle. I may be (i.e.: AM) unfairly conflating mathematics with economics, but surely the man can understand and believe that his 9-9-9 plan simply doesn’t add up. Ezra Klein has been doing some of the best coverage on the 9-9-9 plan, which was bound to set off policy wonks regardless of ideological loyalties. That coverage includes this absolutely delightful graph and this much more helpful table. Bottom line: if you’re rich — hooray! Way, way less taxes. Because a smaller percentage of your income goes towards absolute necessities, you can save much more and have a much bigger rainy-day fund at the end of tax season. Further, with no more progressive tax, you can buy a lot more.

Perhaps Cain’s inability to factor in the myriad deductions on every front of the current tax code highlights its opacity and complexity. The tax code is really a series of tubes — a series of tubes through which members of Congress can sneakily send money to the groups they favor and, at the end of the day, call it a tax cut, rather than spending. Subsidies and write-offs are selective, and, thus, don’t represent across-the-board tax cuts and, thus, benefit some more than others. The home mortgage interest tax-deduction benefits homeowners much more than renters, who often pay obscene rates. It subsidizes the cost of house and increases demand, which is certainly part of what led to excess housing stock, while there is shortage of rental properties.

But, let’s get back to 9-9-9. Taking all of the current deductions into account, the Tax Policy Center (jointly run by Brookings and Urban), determined that it will actually decrease Americans’ taxes by $1,271. Oh wait — but that’s only because it will lower the top 20%’s taxes by roughly $23,000, while raising just about everyone else’s (the top 0.1 percent get a drool-eliciting $1.7 million tax break). Politifact gave a much more tempered critique, claiming that single person without dependents would benefit, while a married couple with dependents would surely suffer.

And, of course, 9-9-9 is really a misnomer for a bunch of reasons. First, as Klein, via USC’s Edward Kleinbard, points out, you could really simplify the title further by calling it 27. Tax filers who are too poor to pay federal income taxes now will have to pay them on their total income plus on all of their purchases. The business tax will get passed on to consumers in the form of higher prices for goods — a VAT in addition to a sales tax, whereas economists typically debate the merits of one or the other — or to workers in the form of lower wages or to both. Klein also posted some more concrete calculations of the tax debt, some of which were run by a tax law professor and some of which were simply put through TurboTax (the 9-9-9 plan is all of simplicity, after all).

But, second, 9-9-9 is a misnomer because it’s only step two of a three step process. Step 1, lower the top business and individual tax rates to 25%. What about people in lower brackets — the other 96% of taxpayers? Do they get a tax-cut, too? Michelle Bachmann said the devil’s in the details, but, really, there aren’t too many details here. Best to push forward without over-thinking it. Next, it’s 9-9-9! Huzzah! Or 27! Whatevs… But after 9-9-9, we get the “Fair Tax,” which is a nice name for a really big sales tax — 30%. Just to think, I was upset about the DC 10% restaurant tax. Well, now it’ll be 40%, I guess. Except that it’ll be much more, because states will have to raise more revenue to pay their own new taxes.

Cain’s August economic adviser, who isn’t actually an economist, just shrugged criticism off as “Washington thinking.” Cain has likewise repeatedly told people to do the math, check his website (which was down even as he was referring people to it), and stop misrepresenting his plan. If analyzing the actual impact of a plan on the poor and middle class is “Washing thinking,” I’m starting to feel just a little bit better about Washington. Ruth Marcus seems to believe that even Cain doesn’t really understand 9-9-9.

So, why exactly is Cain still pushing it. Well, admitting it’s wrong would be to admit defeat, and he isn’t willing to walk back his comments on the electric fence or Ubeki-beki-beki-beki-stan-stan (I have a dacha there; it’s lovely). Also, simple tag-lines like this have traction, until people look a bit more closely. But, much like cheap, low-quality pizza, the fun begins to wear off after a while. There’s option three, as well: Cain’s ties to people like the Koch brothers are so deep and so ingrained that he simply doesn’t care. He sees an America where you have to struggle constantly to stay ahead and where the wealthy represent the choicest citizens. Or, maybe he just wants to tap into a bunch of corporate, libertarian cash – sweet, dirty, filthy, corporate, small-government cash. It’s hard to tell, but it certainly doesn’t portend a particularly high level of rhetoric for the coming campaign season.

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The Penn Political Review was founded in 2003 as The Soapbox Magazine and has grown over the past 10 years to include a wide spectrum of student, faculty, and guest opinions from the University of Pennsylvania community. Our articles are chosen by a non-partisan Editorial Board that seeks incisive, provocative pieces representing the views of Penn’s diverse community. We also love political cartoons and art and have a tradition of featuring the best ones as our cover art.

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John M. BridgelandDirector, White House Domestic Policy Council (2001-2004)